Will Ty Coughlin's Reverse Funnel System Genuinely Work?
The reverse funnel is a marketing strategy that could help your company to grow its customer base. Essentially, it’s when businesses design marketing campaigns in order to convert potential customers into actual ones. The system is supposed to be able to take advantage of the 'reverse' psychology behind persuasive sales as it would make shoppers feel more committed at every stage of their purchase process. Typically, reverse funnels are made up of a few stages, including:
You create an offer Your website visitors sign up to receive a relevant email You then send that email and they're able to follow through the sales funnel They either buy your product or they don’t
The way it’s supposed to work is that you create an excellent first impression at the beginning of the process. By giving your customers more reasons to commit with each step, you start by building trust in both them and your business. Then you gather feedback on their experience. Finally, those who commit find themselves more likely to follow through with the purchase than if there had been no interaction between them and your brand in the first place. Sounds pretty good, right? The idea behind reverse funnels is great. It’s the psychology of it that makes it perfect for online business. With that said, you need to think about what could go wrong with this strategy and how it could affect your business negatively in the long run.
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Here are three main problems with the reverse funnel system: The first problem with reverse funnels is that, if a customer doesn't buy your product immediately, they might forget about your brand altogether by the time you send them an email explaining why your product would be worth buying. There's also the risk that you'll lose those customers by sending them an email which looks like it would link to a report, but actually leads them into a dud of a sales page.
"Reverse funnel" is one of the hottest marketing terms around.
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The concept of a reverse funnel is getting a lot of attention recently, and it's been popularized by Internet marketer Ty Coughlin in the form of his Reverse Funnel System (RFS) -- available for purchase at http://reversefunnelsystem.com/ -- which promises to help you grow your business through viral marketing (Coughlin prefers this term over "word of mouth").
Coughlin, who is also the founder and president of The Coughlin Company, tells BusinessKnowHow that "reverse funnels" are about focusing on your customers first and foremost.
It's not about selling product. It's about building relationships, trust and by extension influential word-of-mouth."
Coughlin himself has built a substantial marketing career on the concept of reverse funnels, having written several books about building opt-in lists for businesses (eg., What if I Told You -- How to Create a Loyal Fan Base ), as well as an ezine called The Funnel System Report. In fact, Coughlin has been creating online marketing products since 1995.
Like most marketers, Coughlin -- who runs a "reverse" funnel marketing company with his wife -- is concerned about the "lost" customers who walk away from a purchase. Here's why:
"The biggest problem I see businesses having with their marketing campaigns is that they aren't converting prospects into customers," Coughlin tells us. The reason for this is that those consumers who are making a decision about whether or not to buy your product are only a small subset of the potential market. If you're not capturing these potential customers in the first place, you're basically going to end up losing them as customers over time by ignoring them.
"The best way to get potential customers is to capture them via a newsletter. If you don't capture them in the first place, then you're going to lose them," Coughlin says.
Reverse funnel marketers are aware of this because their businesses are built around the idea of turning potential customers into actual customers. When you look at it from that perspective, the reverse funnel model makes sense.
But there's one big problem with reverse funnels: They're not necessarily the most effective strategy for creating a strong business brand or customer loyalty -- they rely on short-term marketing gimmicks and low-priced products. It's only when those products have high margins that marketers see a profit.
"The numbers don't lie: You've got to have a high price point product to be financially successful with these marketing techniques," Coughlin warns. "If you're selling something for $20 or for $100, there is no way you can make money. You can only make a profit when the products are priced at $250."
That kind of pricing would be too expensive for most companies to stick with -- even those that are generating millions of dollars in revenue. Thus, such a strategy would be impractical long-term because it relies on creating low-cost products for customers and then turning them into customers who will buy your higher-priced product later.
We believe there are better ways to build customer loyalty and trust than relying on gimmicks like reverse funnels:
1. Find a unique way to create a strong brand and customer loyalty -- before you develop your "reverse funnel" product.
2. Engage in viral marketing techniques that rely on free, rather than low-cost, products or services.
The key to building customer trust is creating strong relationships with customers by offering high-quality products -- not cheap ones that aren't worth anything in the long run. Yes, you may have to spend money up front for reputable professionals (eg. lawyers) to handle the legalities of your business. But, even then, you'll need to work hard at maintaining your brand in order to achieve long-term success.
In short, it's better for your business to rely on the strategies that focus on building your brand first and then using that name recognition to sell more expensive products later rather than spending money on gimmicky reverse funnel campaigns that could leave you with a bad reputation or a product nobody wants.
Conclusion:
Coughlin acknowledges that many of his techniques are clearly gimmicky. However, the fact remains that his philosophy is based on the idea of capitalizing on customers' initial trust in your business name. What he's trying to create is a "brand" -- and only when there's trust between you and your customers will they buy from you again.
For more information on Coughlin's reverse funnel strategies, check out http://www.reversefunnelsystem.com/ .
About Our Expert: Steve Silberman is an executive editor at Psychology Today magazine and author of 'Neurotribes: The Legacy of Autism and How to Think Smarter About People' (Harper Collins).